U.S. Warns Teamsters On Contract

By Helen DewarBy Helen DewarMarch 16, 1979

The Carter administration will move swiftly for sweeping deregulation of the trucking industry if the Teamsters union wins a new contract "substantially" in excess of anti-inflation guidelines, President Carter's chief inflation adviser said yesterday.

Openly employing a carrot-and-stick strategy to prod both sides in the current trucking contract talks to settle within the guidelines, Council on Wage and Price Stability Chairman Alfred E. Kahn also said the administration will be "more modest" in its eventual deregulation proposals if the guidelines are not breached.

Both union and industry leaders oppose deregulation, which would introduce more competitiveness -- including nonunion business -- into the heavily regulated trucking industry. While the issue has always loomed in the background of the contract talks as a handy government lever to force guideline compliance, the administration appeared recently to have put its trucking deregulation plans on a back burner.

Kahn's warning, issued to reporters at a news briefing in his office, was the government's first reponse to a guideline-busting wage demand from the Teamsters last week, which prompted some speculation that a settlement might be unattainable without a strike.

The possibility looms for strikes over the next few weeks in other transportation areas as well. The railway clerks union has threatened to strike the Conrail system, and machinists yesterday rejected a proposed contract with United Airlines and set a strike deadline for mindnight tonight, although they reportedly agreed late yesterday to resume negotiations and delay any strike action.

While Kahn was clearly flexing the government's muscle, he also said he remains "genuinely hopeful" of a moderate Teamster settlement, and indicated that the Teamsters' initial demand may not be as devastating to this prospect as some calculations have indicated.

Although he has not seen the proposal, he said he understands it would amount to increases of 13 to 15 percent in the first year and 33 to 35 percent over the three-year life of the contract.

While this is substantially beyond the administration's guideline of 7 percent for wage and benefit increases, it is less than some industry estimates of up to 50 percent over three years.

Estimates of the actual cost of the proposal have varied widely, and Kahn's calculation appeared to fall on the low side of the spectrum. Moreover, he said a mathematically precise 7 percent settlement was not required, noting that existing flexibility in the guidelines could yield a firstyear Teamster settlement in the range of 8 1/2 percent.

In a clearly related move, Kahn also disclosed that the administration is significantly tightening its price standard to head off what one official termed "a serious surge of prices in April and May." The Teamsters, among other unions, have argued they can't keep down wages without some price abatement. (Details, Page F1)

The Teamsters' current master freight agreement covering 300,000 truck drivers and warehouse workers expires March 31, and talks so far have reportedly made no progress on economic issues. Bargaining on money is expected to begin in earnest Tuesday, when the talks move from Florida to a motel in Arlington.

The teamsters contract is viewed as critical and perhaps decisive to the fate of the voluntary anti-inflation program, which helps explain Kahn's unusual move yesterday.

Kahn, who was the key figure in deregulation of the airline as chairman of the Civil Aeronautics Board, said his approach to the trucking talks had been endorsed in advance by Carter. He said he talked to the president about his plans yesterday morning and Carter said, "Go ahead."